Riyadh is among the lowest risk cities in the region, with a rating that puts it ahead of international business hubs such as Milan, Lisbon, Istanbul and Moscow, according to the findings from the 2012 People Risk Index, created by Aon Hewitt, the global human resources business of Aon plc.
The Aon Hewitt 2012 People Risk Index measures the risks that organizations face with recruitment, employment and relocation in 131 cities worldwide by analyzing 30 qualitative and quantitative factors across five areas including, demographics, education, government support, talent development and employment practices.
Riyadh ranks 56th among the 131 cities covered in the Index and is the fifth-highest ranked city in the Middle East, behind Dubai, Doha, Muscat and Manama. It has a risk similar to Shanghai, Beijing and Kuala Lumpur. Riyadh also finished higher on the People Risk Index than leading Asian business hubs such as Jakarta, Colombo, Bangkok and Mumbai, and European capitals such as Rome, Krakow, Budapest and Belgrade.
When it came to Middle Eastern cities, Riyadh was followed by Tunis, Cairo, Amman, Tehran, Algiers and Rabat on the list, while Sana’a and Damascus were ranked the lowest of all cities involved in the survey.
According to the report, Riyadh’s young population and projected growth in workforce in the next 10 years are its strengths versus European cities. In addition, Riyadh has a very low risk for brain drain as the mobility of professional workforce is positive into the city, with qualified workforce arriving from other Saudi Arabia locations as well as expatriates from other Arab countries and the rest of the world (i.e. India, Europe, US).
Based on Aon Hewitt analysis, MENA cities can be divided into two groups. The first group consists of cities with relatively low-risk ratings and includes the GCC cities (Dubai, Doha, Muscat, Manama, and Riyadh). The second group of cities, with relatively high risk ratings includes Tunis, Cairo, Amman, Tehran, Algiers, Rabat Tripoli, Baghdad, Sana’a and Damascus. Some additional key findings of the people risk factors are highlighted below.
Demographics risks are those associated with labor supply, the economy and the society.
The key risk factors that differentiate the low risk MENA cities from the high risk group include the higher workforce productivity due to a more stable economic environment, future availability of workforce due to younger population composure and population inflow. This thus increases the workforce pool that companies can access. In contrast, there is a higher rate of emigration in the high-risk group reducing the pool of available workforce in those cities.
The key risk factors that differentiate the high-risk MENA cities from the low risk group are primarily attributed to higher terrorism and political risk as well as violence and crime. In the recent Arab Spring1, the high risk cities were more affected with higher political and economic instability as the cities experienced significant parliamentary and policy reforms. Thus, there is great uncertainty in terms of government support and relations. In contrast, the low-risk MENA cities faced minor civil unrest and political changes and the economic stability in these countries is evident even during the Arab Spring, allowing employers to keep their workforce plans and manage capacity of talent over longer time, with less disruptive and costly events.
"This period is an inflection point in the development of the region; companies’ decisions on operating in the region are impacted by government limitations on expatriate workforce employment and incentives for employment of local talent", said Radhika Punshi, Head of Applied Research and Solutions for Aon Hewitt in the MENA region.
The key risk factors that differ between the low risk MENA cities from the high risk group include literacy rates, and secondary and tertiary enrollments. The low risk cities typically have high literacy rates of approximately 90 percent compared to the high risk cities with literacy rates that range from 56 percent to 83 percent.